Guarantor Financial Information | Guarantor Financial Information On April 25, 2014 , Rice Energy issued $900.0 million in aggregate principal amount of the 2022 Notes and on March 26, 2015 , Rice Energy issued $400.0 million in aggregate principal amount of the 2023 Notes. The obligations under the Notes are fully and unconditionally guaranteed by the guarantors, subject to release provisions described in Note 5. In connection with the closing of the Vantage Acquisition, Rice Energy and the Company entered into a Debt Assumption Agreement dated as of October 19, 2016, pursuant to which the Company agreed to become the primary obligor of the Notes and certain entities acquired in the Vantage Acquisition became wholly-owned subsidiaries of the Company and guarantors of the Notes. Each of the guarantors is 100% owned by the Company. As of September 30, 2017 , Rice Energy held approximately 93.74% of the economic interest in the Company, with the remaining 6.26% membership interest collectively held by the Vantage Sellers. The Vantage Sellers have no voting rights with respect to their membership interest in the Company. The Vantage Sellers have a redemption right to cause the Company to redeem, from time to time, all or a portion of their common units. Each common unit will be redeemed for, at the Company’s option, a newly-issued share of common stock of Rice Energy or a cash payment equal to the volume-weighted average closing price of a share of Rice Energy’s common stock for the five trading days prior to and including the last full trading day immediately prior to the date that the member delivers a notice of redemption (subject to customary adjustments, including for stock splits, stock dividends and reclassifications). Upon the exercise of the redemption right, the redeeming member surrenders its common units to the Company and the corresponding number of 1/1000ths of shares of Rice Energy preferred stock in respect of each redeemed common unit to the Company for cancellation. The Third A&R LLC Agreement of the Company requires that Rice Energy contribute cash or shares of its common stock to the Company in exchange for the Company’s common units equal to the number of the Company’s common units to be redeemed from the member. The Company will then distribute such cash or shares of the Rice Energy common stock to such Vantage Seller to complete the redemption. Upon the exercise of the redemption right, Rice Energy may, at its option, effect a direct exchange of the Company’s common units (and the corresponding shares of Rice Energy preferred stock (or fractions thereof) from the redeeming Vantage Seller. As a result, Rice Energy expects that over time it will have an increasing economic interest in the Company as the Vantage Sellers elect to exercise their redemption right. Moreover, any transfers of common units by the Vantage Sellers (other than permitted transfers to affiliates) must be approved by Rice Energy. Rice Energy intends to retain full voting and management control over the Company. On June 23, 2017, Rice Energy sent notices to the Vantage Sellers, in their capacity as members of the Company, stating that the Merger was anticipated to constitute a Manager Change of Control (as defined in the Third A&R LLC Agreement) and that Rice Energy intended to exercise its right to effect the redemption of all the Company’s common units (along with 1/1000th of a share of preferred stock in respect of each REO Common Unit) outstanding held by each Vantage Seller prior to the effective time of the Merger in exchange for an equal number of shares of Rice Energy’s common stock. The Company’s subsidiaries that comprise its Rice Midstream Holdings segment and Rice Midstream Partners segment are unrestricted subsidiaries under the indentures governing the Notes and consequently are not guarantors. In accordance with positions established by the SEC, the following shows separate financial information with respect to the Company, the guarantors and the non-guarantor subsidiaries. The principal elimination entries below eliminate investment in subsidiaries and certain intercompany balances and transactions. Condensed Consolidated Balance Sheet as of September 30, 2017 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Assets Current assets: Cash $ 5 $ 137,059 $ 84,553 $ — $ 221,617 Accounts receivable 1,364 266,661 34,103 — 302,128 Current receivable from parent 9 (42,142 ) 23,540 18,593 — Prepaid expenses, deposits and other 19 6,154 1,901 — 8,074 Derivative instruments 8,101 9,573 — — 17,674 Total current assets 9,498 377,305 144,097 18,593 549,493 Gas collateral account — 1,795 112 — 1,907 Investments in subsidiaries 5,044,158 (3 ) — (5,044,155 ) — Property, plant and equipment, net — 5,257,104 1,513,290 (93,434 ) 6,676,960 Deferred financing costs, net 19,622 — 11,340 — 30,962 Goodwill 370,362 — 512,026 — 882,388 Intangible assets, net — — 43,306 — 43,306 Derivative instruments 6,917 13,125 — — 20,042 Other non-current assets — 45 — — 45 Total assets $ 5,450,557 $ 5,649,371 $ 2,224,171 $ (5,118,996 ) $ 8,205,103 Liabilities and stockholders’ equity Current liabilities: Current payable to parent $ 36,913 $ — $ — $ — $ 36,913 Accounts payable 8 10,818 19,346 — 30,172 Royalties payables — 105,909 — — 105,909 Accrued capital expenditures — 137,873 74,562 — 212,435 Leasehold payables — 22,132 — — 22,132 Derivative instruments — 2,709 — — 2,709 Embedded derivative liability — — 14,368 — 14,368 Other accrued liabilities 38,341 49,457 12,969 — 100,767 Total current liabilities 75,262 328,898 121,245 — 525,405 Long-term liabilities: Long-term debt 1,407,178 — 395,500 — 1,802,678 Leasehold payable — 13,228 — — 13,228 Long-term payable to parent 6,694 — — — 6,694 Derivative liabilities — 13,004 — — 13,004 Other long-term liabilities 4,922 58,682 6,398 — 70,002 Total liabilities 1,494,056 413,812 523,143 — 2,431,011 Mezzanine equity: Redeemable noncontrolling interest — — 496,330 — 496,330 Unitholders’ capital before noncontrolling interest 3,956,501 5,235,559 (191,401 ) (5,118,996 ) 3,881,663 Noncontrolling interests in consolidated subsidiaries — — 1,396,099 — 1,396,099 Total liabilities and unitholders’ capital $ 5,450,557 $ 5,649,371 $ 2,224,171 $ (5,118,996 ) $ 8,205,103 Condensed Consolidated Balance Sheet as of December 31, 2016 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Assets Current assets: Cash $ 230,944 $ 164,522 $ 71,821 $ — $ 467,287 Accounts receivable — 201,122 16,549 919 218,590 Receivable from affiliate (3,060 ) — 12,441 (9,381 ) — Prepaid expenses, deposits and other — 2,213 194 — 2,407 Total current assets 227,884 367,857 101,005 (8,462 ) 688,284 Gas collateral account — 5,220 112 — 5,332 Investments in subsidiaries 4,738,088 6,101 — (4,744,189 ) — Property, plant and equipment, net — 4,947,518 1,203,047 (58,276 ) 6,092,289 Deferred financing costs, net 21,372 — 15,012 — 36,384 Goodwill 384,430 — 494,581 — 879,011 Intangible assets, net — — 44,525 — 44,525 Derivative instruments — 11,435 — — 11,435 Long-term receivable from parent 18,847 — — — 18,847 Other non-current assets — 475 — — 475 Total assets $ 5,390,621 $ 5,338,606 $ 1,858,282 $ (4,810,927 ) $ 7,776,582 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ — $ 8,724 $ 8,595 $ — $ 17,319 Royalties payables — 87,098 — — 87,098 Payable to affiliate — 30,953 — (30,953 ) — Current payable to parent 72,056 — — 22,490 94,546 Accrued capital expenditures — 89,403 35,297 — 124,700 Leasehold payables — 22,869 — — 22,869 Derivative instruments 348 66,997 — — 67,345 Other accrued liabilities 15,933 53,998 16,451 — 86,382 Total current liabilities 88,337 360,042 60,343 (8,463 ) 500,259 Long-term liabilities: Long-term debt 1,279,481 — 243,000 — 1,522,481 Leasehold payable — 9,237 — — 9,237 Derivative instruments — 17,430 — — 17,430 Other long-term liabilities 720 66,228 5,541 — 72,489 Total liabilities 1,368,538 452,937 308,884 (8,463 ) 2,121,896 Mezzanine equity: Redeemable noncontrolling interest — — 382,525 — 382,525 Unitholders’ capital before noncontrolling interest 4,022,083 4,885,669 (147,581 ) (4,802,464 ) 3,957,707 Noncontrolling interests in consolidated subsidiaries — — 1,314,454 — 1,314,454 Total liabilities and unitholders’ capital $ 5,390,621 $ 5,338,606 $ 1,858,282 $ (4,810,927 ) $ 7,776,582 Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2017 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ 303,196 $ — $ — $ 303,196 Gathering, compression and water services — — 121,239 (70,353 ) 50,886 Other revenue — 11,200 — — 11,200 Total operating revenues — 314,396 121,239 (70,353 ) 365,282 Operating expenses: Lease operating — 14,547 — (27 ) 14,520 Gathering, compression and transportation — 95,863 — (50,725 ) 45,138 Production taxes and impact fees — 6,179 — — 6,179 Exploration — 5,042 — — 5,042 Midstream operation and maintenance — — 11,800 (5,240 ) 6,560 Incentive unit expense — 3,178 93 — 3,271 Loss on sale of Barnett Assets — 15,915 — — 15,915 General and administrative — 23,426 12,797 — 36,223 Depreciation, depletion and amortization — 153,220 9,735 (6,065 ) 156,890 Acquisition expense — 6,410 (80 ) — 6,330 Amortization of intangible assets — — 412 — 412 Other expense — 12,012 2,864 — 14,876 Total operating expenses — 335,792 37,621 (62,057 ) 311,356 Operating income (loss) — (21,396 ) 83,618 (8,296 ) 53,926 Interest expense (24,917 ) — (3,817 ) — (28,734 ) Other income (expense) (354 ) 41 117 — (196 ) Gain on derivative instruments 28,306 4,228 — — 32,534 Loss on embedded derivatives — — 1,049 — 1,049 Amortization of deferred financing costs (2,005 ) — (1,257 ) — (3,262 ) Equity in income (loss) in affiliate 14,540 2 — (14,542 ) — Net income 15,570 (17,125 ) 79,710 (22,838 ) 55,317 Less: net (income) attributable to noncontrolling interests — — (39,842 ) — (39,842 ) Net income attributable to Rice Energy Operating 15,570 (17,125 ) 39,868 (22,838 ) 15,475 Less: Preferred dividends and accretion of redeemable noncontrolling interests — — (107,412 ) — (107,412 ) Net income (loss) attributable to Rice Energy Operating common stockholders $ 15,570 $ (17,125 ) $ (67,544 ) $ (22,838 ) $ (91,937 ) Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 2016 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ 162,354 $ — $ — $ 162,354 Gathering, compression and water services — — 60,052 (34,876 ) 25,176 Other revenue — 11,390 — — 11,390 Total operating revenues — 173,744 60,052 (34,876 ) 198,920 Operating expenses: Lease operating — 11,979 — — 11,979 Gathering, compression and transportation — 56,957 — (27,360 ) 29,597 Production taxes and impact fees — 3,695 — — 3,695 Exploration — 3,396 — — 3,396 Midstream operation and maintenance — — 5,569 (1,438 ) 4,131 Incentive unit expense — 5,920 — — 5,920 General and administrative — 19,679 10,277 — 29,956 Depreciation, depletion and amortization — 79,737 7,064 (3,606 ) 83,195 Acquisition expense — 614 — — 614 Amortization of intangible assets — — 411 — 411 Other expense (income) — 10,064 89 — 10,153 Total operating expenses — 192,041 23,410 (32,404 ) 183,047 Operating (loss) income — (18,297 ) 36,642 (2,472 ) 15,873 Interest expense (22,912 ) (17 ) (1,492 ) — (24,421 ) Other income (1,962 ) 61 1 — (1,900 ) Loss on derivative instruments 110,615 73,300 — — 183,915 Amortization of deferred financing costs (1,115 ) — (132 ) — (1,247 ) Equity in loss of joint ventures and subsidiaries 146,077 3,029 — (149,106 ) — (Loss) income before income taxes 230,703 58,076 35,019 (151,578 ) 172,220 Income tax benefit (expense) (31,782 ) (89,278 ) 39,918 — (81,142 ) Net (loss) income 198,921 (31,202 ) 74,937 (151,578 ) 91,078 Less: net income attributable to noncontrolling interests — — (16,665 ) — (16,665 ) Net (loss) income attributable to Rice Energy Operating 198,921 (31,202 ) 58,272 (151,578 ) 74,413 Less: Preferred dividends and accretion of redeemable noncontrolling interests — — (8,581 ) — (8,581 ) Net loss attributable to Rice Energy Operating common unitholders $ 198,921 $ (31,202 ) $ 49,691 $ (151,578 ) $ 65,832 Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2017 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ 1,008,922 $ — $ — $ 1,008,922 Gathering, compression and water services — — 315,157 (195,863 ) 119,294 Other revenue — 29,179 — — 29,179 Total operating revenues — 1,038,101 315,157 (195,863 ) 1,157,395 Operating expenses: Lease operating — 54,936 — (122 ) 54,814 Gathering, compression and transportation — 263,673 — (139,978 ) 123,695 Production taxes and impact fees — 19,011 — — 19,011 Exploration — 16,160 — — 16,160 Midstream operation and maintenance — — 31,454 (9,896 ) 21,558 Incentive unit expense — 10,641 313 — 10,954 Loss on sale of Barnett Assets — 15,915 — — 15,915 Impairment of natural gas properties — 92,355 — — 92,355 General and administrative — 72,293 36,980 — 109,273 Depreciation, depletion and amortization — 426,538 28,085 (14,951 ) 439,672 Acquisition expense — 7,973 972 — 8,945 Amortization of intangible assets — — 1,220 — 1,220 Other expense — 29,268 4,973 — 34,241 Total operating expenses — 1,008,763 103,997 (164,947 ) 947,813 Operating income (loss) — 29,338 211,160 (30,916 ) 209,582 Interest expense (72,706 ) 3 (10,323 ) — (83,026 ) Other income (258 ) 262 254 — 258 Gain on derivative instruments 29,710 91,603 — — 121,313 Loss on embedded derivatives — — (14,368 ) — (14,368 ) Amortization of deferred financing costs (5,581 ) — (3,759 ) — (9,340 ) Equity in income (loss) of joint ventures and subsidiaries 171,718 5 — (171,723 ) — Income (loss) before income taxes 122,883 121,211 182,964 (202,639 ) 224,419 Income tax (expense) benefit — — — — — Net income (loss) 122,883 121,211 182,964 (202,639 ) 224,419 Less: net income attributable to noncontrolling interests — — (101,534 ) — (101,534 ) Net income (loss) attributable to Rice Energy Operating 122,883 121,211 81,430 (202,639 ) 122,885 Less: Preferred dividends and accretion of redeemable noncontrolling interests — — (136,930 ) — (136,930 ) Net income (loss) attributable to Rice Energy Operating common unitholders $ 122,883 $ 121,211 $ (55,500 ) $ (202,639 ) $ (14,045 ) Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2016 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Operating revenues: Natural gas, oil and natural gas liquids (NGL) sales $ — $ 397,108 $ — $ — $ 397,108 Gathering, compression and water services — — 183,666 (110,210 ) 73,456 Other revenue — 24,296 — — 24,296 Total operating revenues — 421,404 183,666 (110,210 ) 494,860 Operating expenses: Lease operating — 32,088 — — 32,088 Gathering, compression and transportation — 156,467 — (71,569 ) 84,898 Production taxes and impact fees — 8,005 — — 8,005 Exploration — 9,934 — — 9,934 Midstream operation and maintenance — — 19,793 (1,485 ) 18,308 Incentive unit expense — 42,932 1,970 — 44,902 Impairment of fixed assets — — 2,595 — 2,595 General and administrative — 54,465 29,636 — 84,101 Depreciation, depletion and amortization — 233,841 22,302 (9,011 ) 247,132 Acquisition expense — 615 556 — 1,171 Amortization of intangible assets — — 1,222 — 1,222 Other expense — 25,562 238 — 25,800 Total operating expenses — 563,909 78,312 (82,065 ) 560,156 Operating (loss) income — (142,505 ) 105,354 (28,145 ) (65,296 ) Interest expense (68,528 ) (51 ) (5,165 ) — (73,744 ) Other income (1,214 ) 2,074 2 — 862 Gain on derivative instruments 51,575 964 — — 52,539 Amortization of deferred financing costs (3,402 ) — (1,014 ) — (4,416 ) (Loss) income before income taxes (21,569 ) (139,518 ) 99,177 (28,145 ) (90,055 ) Income tax benefit (expense) 45,729 — — — 45,729 Net (loss) income 24,160 (139,518 ) 99,177 (28,145 ) (44,326 ) Less: net income attributable to noncontrolling interests — — (55,535 ) — (55,535 ) Net loss attributable to Rice Energy Operating 24,160 (139,518 ) 43,642 (28,145 ) (99,861 ) Less: Preferred dividends and accretion of redeemable noncontrolling interests — — (19,983 ) — (19,983 ) Net loss attributable to Rice Energy Operating common unitholders $ 24,160 $ (139,518 ) $ 23,659 $ (28,145 ) $ (119,844 ) Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2017 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Net cash provided by operating activities $ 74,955 $ 507,824 $ 182,963 $ (45,866 ) $ 719,876 Capital expenditures for property and equipment — (769,811 ) (282,565 ) 45,866 (1,006,510 ) Acquisitions — (177,554 ) (11,324 ) — (188,878 ) Proceeds from sale of Barnett Assets — 140,995 — — 140,995 Investment in subsidiaries (285,065 ) 728 — 284,337 — Net cash used in investing activities (285,065 ) (805,642 ) (293,889 ) 330,203 (1,054,393 ) Proceeds from borrowings 143,000 — 158,500 — 301,500 Repayments of debt obligations (18,000 ) — (6,000 ) — (24,000 ) Debt issuance costs (1,416 ) — (130 ) — (1,546 ) Distributions to the Partnership's public unitholders — — (59,690 ) — (59,690 ) Net contribution to Strike Force Midstream by Gulfport Midstream — — 39,372 — 39,372 Preferred dividends on Series B Units — — (23,105 ) — (23,105 ) Distributions (to) from parent (144,413 ) 270,355 14,711 (284,337 ) (143,684 ) Net cash (used in) provided by financing activities (20,829 ) 270,355 123,658 (284,337 ) 88,847 (Decrease) increase in cash and cash equivalents (230,939 ) (27,463 ) 12,732 — (245,670 ) Cash and cash equivalents, beginning of year 230,944 164,522 71,821 — 467,287 Cash and cash equivalents, end of year $ 5 $ 137,059 $ 84,553 $ — $ 221,617 Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2016 (in thousands) Rice Energy Operating LLC Guarantors Non-Guarantors Eliminations Consolidated Net cash (used in) provided by operating activities $ (28,803 ) $ 292,263 $ 121,209 $ (37,156 ) $ 347,513 Capital expenditures for property and equipment 1,924 (521,711 ) (183,712 ) 37,156 (666,343 ) Investment in subsidiaries (252,783 ) 295,822 — (43,039 ) — Other acquisitions — — (8,472 ) — (8,472 ) Vantage Acquisition deposit — (270,000 ) — — (270,000 ) Net cash provided by (used in) investing activities (250,859 ) (495,889 ) (192,184 ) (5,883 ) (944,815 ) Proceeds from borrowings — — 129,000 — 129,000 Repayments of debt obligations — — (255,000 ) — (255,000 ) Distributions to the Partnership’s public unitholders — — (29,890 ) — (29,890 ) RMP common units issued in the Partnership’s June 2016 offering, net of offering costs — — 164,029 — 164,029 Proceeds from issuance of redeemable noncontrolling interests, net of offering costs — — 368,758 — 368,758 RMP common units issued in the Partnership’s ATM program, net of offering costs — — 15,713 — 15,713 Debt issuance costs (115 ) 105 (907 ) — (917 ) Employee tax withholding for settlement of stock compensation award vestings — — (1,120 ) — (1,120 ) Preferred dividends on Series B Units — — (6,900 ) — (6,900 ) Net cash contributions to Strike Force Midstream by Gulfport Midstream — — 4,000 — 4,000 Distributions (to) from parent 280,462 253,628 (296,667 ) 43,039 280,462 Net cash (used in) provided by financing activities 280,347 253,733 91,016 43,039 668,135 Increase (decrease) in cash and cash equivalents 685 50,107 20,041 — 70,833 Cash and cash equivalents, beginning of year 3 57,798 15,627 — 73,428 Cash and cash equivalents, end of year $ 688 $ 107,905 $ 35,668 $ — $ 144,261 |